Bay Area’s multifamily development boom is captivating all corners of the region.
THIS ARTICLE WAS PUBLISHED IN THE ‘Q’ – THE REGISTRY’S PRINT PUBLICATION – IN JULY 2014
“The amount of units going up is unbelievable,” said Stephen Jackson, vice president of Colliers International in San Francisco. His firm has mapped out 24,627 units in the pipeline at 108 sites around the Bay Area. That counts only projects larger than 25 units and scheduled for delivery by 2016.[contextly_sidebar id=”qH55QL2nHd8vi14cQhQIY8mPFHFOPsi1″]”The good new is that the Bay Area will absorb them, and we could continue building if this market continues,” Jackson said.
Had Colliers included all projects in the pipeline, the map would have been much more crowded. It shows about 500 units going up in Emeryville, for example, but more than 1,200 units are in the pipeline, Jackson said. Other projects that did not make the cutoff for the map include 470 apartment units slated for Redwood City on Middlefield Road, to be built by Denver-based The Pauls Corp. The city has plans for the construction of 2,500 residential units, including condominiums and apartments. Palo Alto-based Essex Property Trust is planning a 420-unit apartment/retail project in Santa Clara to be called Gateway Village, and Cupertino-based KT Properties is moving ahead with plans at the St. James Towers, a 643-unit apartment project in downtown San Jose.[pullquote_right]”The amount of units going up is unbelievable.” Stephen Jackson, vice president of Colliers International in San Francisco[/pullquote_right]As might be expected, more than three-quarters of the new units shown on the regional map are going up in either San Francisco, Oakland or San Jose, with the rest scattered among a dozen cities from San Mateo to Dublin.
San Francisco leads the way with 51 projects totaling 9,083 units. But while San Francisco may have the largest total, Oakland has the largest single project. Developer Zarsion-OHP I, LLC started moving dirt this past March at Brooklyn Basin, which ultimately will add 3,100 units to a 64-acre tract between the Nimitz Freeway and the Oakland Inner Harbor.
This boom has a different flavor than the peak of the market in 2008, Jackson said. In that year, San Francisco added about 2,000 condo units and less than 500 apartment units. In 2013, the city gained about 1,850 apartment units and only about 200 new condo units. Drivers for apartment construction include high rents and low interest rates.
New projects also tend to skew to the high end. Developers are building smaller units, Jackson said. Instead of 1,000 square feet for a two-bedroom apartment, they’re going closer to 750 square feet. That gives the project a higher rent per square foot. But developers also are loading their projects with community amenities such as roof decks with Jacuzzis, large gyms, bike repair shops and pet grooming facilities. On a project that has shaved 250 square feet off of 400 units—or 100,000 square feet—adding back 7,000 square feet of amenities still leaves the developer well ahead, Jackson said.